How to make an early offer on a home this autumn

Domain’s latest home auction report suggests there’s positive momentum before the usually busy autumn selling season, driven by growing seller confidence.

Auction clearance rates across the capitals increased annually by 1.3 percentage points in February, the report showed. Similarly, the combined regional clearance rate is up over the month and is high compared to its historical performance. 

However, it’s hard to say emphatically whether or not buyer confidence has returned, especially where median home prices remain very high (and home loans large).

Sydney’s median home price is $1.6m according to Domain.

In Melbourne it’s closer to $1m.

Both are hefty price tags compared to say, Brisbane, Hobart, Darwin, Perth or Adelaide. 

More home buying but what does that mean for your city?

How you look at the auction market is really a matter of perspective because while a busier auction scene may have more homes on offer, it might also include many more prospective buyers. More bidders will surely see prices escalate!

So, you see, broad optimism about clearance rates can be tricky.

Domain’s chief of research and economics, Dr Nicola Powell offers a balanced view. She says there is historically a seasonal uptick early in the year resulting in higher clearance rates - but it’s early days. 

“While it's too early to determine the strength of the auction market in 2024, this positive trend sets a promising tone for the upcoming autumn selling season,” says Powell.

It’s also important to realise that each city’s auction market needs to be assessed on its own merit. The main reason for this is that lower property supply levels in certain cities and in certain suburbs will likely have bigger crowds - there’s just less on offer for these buyers and fewer auctions to attend. 

Of course, the opposite is true. Where there’s a greater level of housing stock available, there’s a better chance for a potential buyer to make an offer within their budget. 

Put auction results into perspective

So while Sydney’s clearance rate rose to a 7-month high and is above 65% for the first time in three months, Domain also reported that 34% of homes advertised for auction in February were sold prior to going under the hammer.  

And while Melbourne’s clearance rate is above 60% for the first time since October 2023, 18% of its homes at auction in February sold prior to the event.

There can be varied reasons for homes being sold prior to auction, though it typically means that buyers were in a position to take a chance and make an offer ahead of time that was acceptable to the vendor.

How to make an early offer on a home

What we might take away from this is that while weekend auctions have improved in early 2024, and there certainly are some high prices, there may just be a window here for those buyers on a smaller budget to make their move. 

But a few factors will have to fall into place for you as the would-be buyer.

For example:

• Your suburb of choice has a good supply of homes on offer that disperses the buying crowd.

• Cashed-up investors sit out on the homes you’re targeting. 

• You need to know the agent’s process for pre-auction offers. 

• All your finances are in order - chiefly your home loan and first deposit.

Remember, agents are obliged to bring all offers to their client.

And even when a vendor is tempted to accept, other serious buyers may be given the opportunity to compete. This can complicate your strategy but sticking to your plan and your budget is important. 

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